The impact of short-termism on markets

The impact of short-termism on markets Humans are hard-wired to focus on the short term. We all have a tendency to react to immediate risks as a result of the ‘fight or flight’ syndrome inherited by our ancestors thousands of years ago. Our human biases have been exacerbated in more recent times by the need to react more quickly to the data that is provided almost continuously by the barrage of daily ‘news’, the exponential …

How much is really needed in retirement?

How much is really needed in retirement? In the UK in 2014, The Independent Review of Retirement Income (IRRI) was commissioned to look at retirement incomes. Two recommendations from IRRI were: The use of deterministic projections of the returns on products should be banned. They should be replaced with stochastic projections that take into account important real-world issues, such as sequence-of-returns risk (and) inflation. Quite a bit to digest. There is a broader discussion of …

Boom turns to bust – falling Australian home prices.

Boom turns to bust – falling Australian home prices. How far and for how long and what’s the impact on the economy? Key points Property prices in Sydney and Melbourne are likely to see top to bottom falls of around 20% as credit conditions tighten, supply rises and a negative feedback loop from falling prices risks developing.   Other cities will perform better having not seen the boom of the last few years.   Property …

Get real: how we delude ourselves about investments

Get real: how we delude ourselves about investments In 1988, I bought $750 worth of special $5 coins, minted to commemorate the opening of Australia’s Parliament House. I figured it was a one-way bet to investment success. They were legal tender costing $5 and would always be worth at least $5, and if they became sought-after by collectors, the sky was the limit. I found the box of coins recently while cleaning the attic. They …

What two investing insights would you give your 20-year-old self?

What two investing insights would you give your 20-year-old self?   Hamish Douglass, Chief Executive Officer and Chief Investment Officer, Magellan Asset Management My central advice would be that successful investing is about finding and then owning for the long-term companies that can generate excess returns for years to come. It’s not about looking for stocks that might come into short-term favour on stock markets. The worthwhile companies to own for the long term will …